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Impact of Foot and Mouth Disease in Australia

Research report

This report was released on 12 June 2002. It assesses the economic, social and environmental impacts of a range of hypothetical Foot and Mouth Disease (FMD) outbreak scenarios on the agricultural sector, rural and regional Australia, and the national economy

It also assesses how those potential impacts would change if a vaccination policy were in place, or FMD-free geographic zones were established. The report has drawn on information contained in previous studies of the possible impact of FMD on Australia, the impacts of FMD outbreaks on other countries, and wide ranging consultations with government agencies, industry associations and academics.

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A Productivity Commission Research Report — Impact of a Foot and Mouth Disease Outbreak on Australia — has found that a major outbreak could cost Australia over $9 billion in lost export earnings over an eight year period. Such an outbreak could reduce Australia's Gross Domestic Product by between $8 billion and $13 billion.

The report found that the losses from a hypothetical outbreak of Foot and Mouth Disease (FMD) would arise primarily from closure of export markets for Australia's livestock products and would occur regardless of the location of an outbreak. Australia's beef industry would be particularly affected. Because of the size of its beef industry, Queensland would suffer the largest losses, although livestock dependent regions in all States and the Northern Territory would suffer.

The report found that the control of an outbreak would require a major logistical effort by all governments and the livestock industry, at a cost of between $30 million and $450 million, depending on how long it took to achieve control. Commissioner Mike Woods said: 'The necessary control measures, including quarantine of infected properties and slaughter of affected livestock, would have a severe impact on the lives of people and communities in the control areas. The financial losses to the livestock and related industries would also lead to adverse social consequences throughout rural and regional Australia'.

The report found that if FMD-free zones could be established in the unaffected States in the event of an outbreak, and were recognised by our trading partners, the losses to the national economy would be reduced by up to two thirds. Emergency vaccination of animals around outbreak areas would be a sensible option where it could reduce the length of an outbreak.

The Council of Australian Governments is currently reviewing national whole-of-government frameworks for the prevention, preparedness for, and management of a major animal disease emergency such as an FMD outbreak. The Commonwealth Government requested the Productivity Commission report as an input to that process.

Background information

Leonora Nicol (Media, Publications and Web) 02 6240 3239 / 0417 665 443

Cover, Copyright, Foreword, Contents, Abbreviations and explanations, Glossary, Terms of reference, Key Messages

Control and eradication costs
Costs of trade restrictions
Estimates of the economic impacts
Social Impacts
Environmental impacts

1 Introduction
1.1 The project
1.2 The Commission's approach
1.3 Interpreting the Commission's results
1.4 Structure of the report

2 FMD and its management
2.1 Epidemiology of FMD
2.2 The global pattern of FMD
2.3 Control and eradication strategy

3 Outbreak scenarios and control costs
3.1 Background
3.2 Small outbreak - scenario 1
3.3 Medium-sized outbreak - scenario 2
3.4 Large outbreak - scenario 3
3.5 Modelling results
3.6 Costs of eradication, control and compensation
3.7 Impact of vaccination

4 Trade impacts of foot and mouth disease
4.1 Why do export markets close?
4.2 Which products are affected by trade bans?
4.3 Effects of market closures
4.4 Modelling assumptions
4.5 Zoning

5 Other economic effects
5.1 Impact on livestock production
5.2 Domestic consumer reponses
5.3 Impacts on other industries

6 Quantifying the economic impacts
6.1 Direct impacts of an FMD outbreak
6.2 Indirect and economywide impacts
6.3 Estimating the impact of zoning
6.4 Estimating the impact of vaccination
6.5 Sensitivity analysis

7 Regional and farm impacts
7.1 Regions most affected
7.2 The ability of regions to cope with an outbreak
7.3 Farm level impacts

8 Social impacts
8.1 Lower livestock prices and FMD control measures
8.2 Factors influencing individual responses and mental health effects

9 Environmental impacts
9.1 Carcass disposal
9.2 Other impacts

A Conduct of the research paper
Meeting with individuals and organisations
A.1 Report of the referee

B Description of previous disease outbreaks
B.1 Ovine Johne's disease in south-east Australia
B.2 Newcastle disease in the MAngrove Mountain area, NSW
B.3 Foot and mouth disease in the UK
B.4 Anthrax outbreak in Victoria

C Revenue losses to the livestock inductries for each outbreak scenario

D Regional and farm analysis

E Economic welfare effects on consumers and producers
E.1 The welfare changes due to an FMD outbreak
E.2 Net welfare effect of an FMD outbreak